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Agropur MSI, LLC v. Sterling Technology, Inc.

United States District Court, W.D. Wisconsin

March 15, 2016

AGROPUR MSI, LLC, Plaintiff,
v.
STERLING TECHNOLOGY, INC., Defendant.

OPINION AND ORDER

BARBARA B. CRABB District Judge

Plaintiff Agropur MSI, LLC has filed a five-count complaint against defendant Sterling Technology, Inc. setting forth claims for breach of contract and breach of various express and implied warranties. Plaintiff contends that defendant sold plaintiff colostrum (a type of protein powder) that contained an excessive amount of gluten. Defendant answered by filing counterclaims alleging that in a separate transaction, plaintiff sold defendant colostrum powder that contained debris, metal shavings and “warehouse beetles” (a type of insect). Now plaintiff has filed a motion for summary judgment in which it requests: (1) judgment in its favor on liability issues related to its breach of contract and breach of warranty claims; and (2) judgment in its favor on all of defendant’s counterclaims. Plaintiff has also filed a motion requesting that I sanction defendant for failing either to preserve a sample of the allegedly contaminated colostrum powder or allow defendant to inspect. After reviewing the parties’ briefs, I am granting plaintiff’s motion for summary judgment and denying plaintiff’s motion for sanctions.

Defendant concedes that plaintiff is entitled to summary judgment as to liability on plaintiff’s affirmative claims, Plf.’s PFOF ¶ 33, dkt. #27; it does not oppose plaintiff’s motion for summary judgment on defendant’s counterclaim for breach of express warranty; and it has expressly agreed to withdraw its counterclaim for breach of implied warranty. Thus, the only claim that remains in dispute is defendant’s counterclaim for breach of contract (count I of defendant’s counterclaims). I conclude that this claim is barred by the one-year contractual limitations period set forth in plaintiff’s December 19, 2013 “Order Confirmation.” This decision renders plaintiff’s spoliation motion moot to the extent that plaintiff seeks the dismissal of defendant’s counterclaims; if plaintiff believes that it is entitled to a fee award based on defendant’s alleged spoliation of the contaminated colostrum, it may raise this issue after trial.

From the parties’ summary judgment materials and the record, I find that the following facts are material and not subject to genuine dispute.

UNDISPUTED FACTS

Plaintiff Agropur and defendant Sterling are both in the business of selling food products and services. Plaintiff Agropur sells a variety of ingredients and also provides custom food “manufacturing” services, such as agglomeration services. (Agglomeration is a process in which the physical properties of food products are altered so that they are denser, flow better, are more stable or more readily dispersed.) Defendant Sterling’s business focuses primarily on the sale of colostrum, which is an antibiotic-rich milk product produced by mammals in late pregnancy.

Two separate transactions are at issue in this case. In the first transaction, which gave rise to plaintiff’s claims and the filing of this suit, plaintiff contracted with defendant for defendant to provide approximately 1, 500 pounds of “gluten-free” colostrum powder. Defendant shipped the 1, 500 pounds of colostrum powder to plaintiff on February 18, 2014. Plaintiff then mixed the colostrum powder with a customer’s proprietary formula and shipped the mixture to its customer. The customer tested the product and determined that it was not “gluten-free” because the gluten content of the colostrum powder exceeded 20 parts per million. Plaintiff informed defendant of the excessive gluten levels on April 7, 2014 and eventually filed suit on February 13, 2015.

In the second transaction, which gives rise to defendant’s counterclaims, defendant contracted with plaintiff for plaintiff to “agglomerate” approximately 12, 700 pounds of its colostrum. Defendant submitted the purchase order number for the agglomeration of its colostrum on December 19, 2013. That same day, plaintiff responded to defendant’s purchase order by sending defendant an “Order Confirmation.” The Order Confirmation set forth the quantity, price and delivery terms and noted that the order was “subject to Agropur MSI, LLC, terms and con[ditions].” Plaintiff’s standard terms and conditions appended to the Order Confirmation included the following contractual limitations period governing the time for filing claims: “Any action for breach of this contract or any warranty given in connection herewith must be commenced within one (1) year after the cause of action has accrued.” Defendant did not object to this or any other term or condition set forth in the December 19, 2013 Order Confirmation.

At some time between December 19, 2013 and January 24, 2014, plaintiff agglomerated the 12, 700 pounds of colostrum as agreed to by the parties. Defendant arranged for the agglomerated colostrum to be picked up from plaintiff’s facility on January 24, 2014 and the colostrum was delivered to defendant’s facility in Brookings, South Dakota on January 27, 2014. When the product arrived at defendant’s Brookings facility, one of defendant’s employees performed a preliminary inspection of the colostrum and did not notice anything unusual about the shipment. However, nearly six weeks later, on March 12, 2014, defendant opened the shipment and found “debris inside the pallets, including metal shavings, dirt, and bugs (both dead and alive).”

Defendant notified plaintiff about the apparent contamination. Plaintiff investigated the problem and requested photographs, which defendant sent. On May 22, 2014, plaintiff requested samples of the contaminated colostrum, samples of the insects and an opportunity to inspect the colostrum packaging. Defendant refused to allow plaintiff to inspect the colostrum or the packaging on the ground that the colostrum had been fumigated on May 2, 2014. Defendant intended to sell the agglomerated colostrum for human consumption, but in light of the fact that it was contaminated and had been fumigated, defendant decided it could only use it as animal feed.

OPINION

Plaintiff argues that defendant’s breach of contract counterclaim fails as a matter of law for a number of reasons. I need not consider each of these arguments, however, because I conclude that defendant’s breach of contract claim is time-barred by the contractual limitations period set forth in plaintiff’s December 19, 2013 Order Confirmation.

As an initial matter, although some material in the record suggests that defendant’s representatives question the binding effect of the terms of the Order Confirmation, including the one-year limitations period, defendant does not raise this issue in its brief. Narducci v. Moore, 572 F.3d 313, 324 (7th Cir. 2009) (arguments not raised in summary judgment brief are waived). Defendant also does not deny that under Wisconsin law, a contractual limitations period is enforceable even if it is shorter than the state statute of limitations. State Department of Public Welfare v. LeMere, 19 Wis.2d 412, 419, 120 N.W.2d 695, 699 (1963) (“Public policy in this state permits parties to bind themselves by contract to a shorter period of limitations than that provided for by statute.”). Accordingly, the question before the court is whether defendant’s breach of contract counterclaim was timely and commenced within one year of its accrual. Resolving this issue requires construction of the parties’ limitations period and ascertaining when defendant’s claim ...


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